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Wealth Management for Expats in Germany

Submitted: October 2013

Wealth management (Vermögensverwaltung)or private banking services range from traditional lending or investment management to tax planning or asset protection.

Generally speaking, you should look for a wealth manager if you think you need help with financial planning, or if you need to delegate this to achieve peace of mind. A bank is prone to offer you more sophisticated services as you get wealthier, but only to the extent that you park your money at this bank.

Alternatively, you may seek fee-based financial advice. Such fees can be worth the price if you hold very large sums of wealth, as the fees may be largely offset by higher returns on your investable wealth.

Germany’s wealth management industry is strongly regulated in order to ensure service quality, transparency and investor protection. A financial advisor should generally give you an investor information leaflet (PIB) prior to going ahead with a specific investment. As far as open-ended investment companies (OPAW) are concerned, EU rules require that you be issued a Key Investor Information (KII) document.

Issues for expatriates

Financial planning complexity increases dramatically when you become an expatriate, as additional cross-border issues must be taken into account. These include, but are not limited to:

  • Availability of Euro-denominated assets
  • Availability of assets in your home country
  • Social security arrangements
  • Effects of international mobility on your pension rights
  • Your residency status for income tax purposes
  • Asset protection
  • Foreign exchange exposure See Foreign Exchange for Expats in Germany
  • Inheritance law considerations, and
  • Inheritance tax planning.

A German wealth manager will probably have enough expertise to advise German residents. This is less likely to be the case when it comes to dealing with your specific cross-border issues, such as UK QROPS compliance or US tax planning. Do check whom you can trust, and what the risks are if things go wrong.

In addition, departing from your home country may be subject to some paperwork there (e.g. tax compliance, letting your insurer know that you leave (See Insurance for Expats in Germany), switching to a non-resident bank account, etc.). A wealth manager in your home country is more likely to be qualified to help you with this.

In all cases, be wary of:

  • Language issues
  • Product transparency, e.g. with regard to the underlying risk
  • Cultural differences, and
  • How contactable your wealth manager is.

 

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